ICAI MCQs Bank
The Institute's own questions for this paper, reproduced word for word and grouped the way ICAI sets them. Graded instantly, with ICAI's own reasoning as the explanation.
Case Scenarios
31 scenarios · 96 questions
Case Scenario 1
Basic Concepts
The following details pertain to Mr. Arvind and his three brothers, Mr. Arjun, Mr. Anand and Mr. Aakash. Mr. Arvind, Mr. Arjun and Mr. Anand are engaged in retail trade business. Mr. Aakash is engaged in the profession of interior decoration. All of them maintain books of account under section 44AA. While the brothers engaged in retail trade business follows mercantile system of accounting, Mr. Aakash engaged in interior decoration profession follows cash system of accounting. The details pertaining to their business for the year ending 31.3.2026 are as under – Particulars Arvind Arjun Anand (i) Turnover of P.Y.2025-26 ₹ 95 lakhs ₹ 2.80 crore ₹ 5.00 crore (ii) Amount received in cash [out of (i) above] ₹ 5 lakh ₹ 8 lakh ₹ 4 lakh (iii) Amount received through NEFT/RTGS on or before 31.7.2026 [out of (i) above] ₹ 85 lakh ₹ 2.65 crore ₹ 4.80 crore (iv) Total receipts in the P.Y.2025-26 ₹ 1.07 crore ₹ 3.00 crore ₹ 5.50 crore (v) Cash receipts [out of (iv) above] ₹ 7 lakh ₹ 10 lakhs ₹ 27 lakhs (vi) Total payments in the P.Y. 2025-26 ₹ 80 lakhs ₹ 1.60 crore ₹ 4.50 crore (vii) Cash payments [out of (vi) above] ₹ 5 lakhs ₹ 8.10 lakhs ₹ 22 lakhs (viii) Profits and gains as per books of account u/s 44AA ₹ 5.90 lakhs ₹ 15.50 lakhs ₹ 30 lakhs Mr. Aakash’s gross receipts for P.Y.2025-26 are ₹ 52 lakhs, out of which ₹ 2 lakhs has been received in cash and the remaining ₹ 50 lakhs through NEFT/RTGS. His profits as per books of account u/s 44AA for P.Y.2025-26 are ₹ 26.75 lakhs. From the information given above, choose the most appropriate answer to the following questions:
0/2 solved
Case Scenario 2
Basic Concepts
The following are the details relating to four resident entities, AB & Co., LM & Co., PQ & Co. and XY & Co. for the P.Y.2025-26 – Particulars AB & Co. (Firm) LM & Co. (Firm) PQ & Co. (LLP) XY & Co. (Firm) (1) Nature of business/ profession Retail trading Business of plying, hiring or leasing goods carriages Wholesale trading Interior decoration (2) System of accounting Mercantile Cash Mercantile Cash (3) Turnover/ Gross receipts ₹ 200 lakhs ₹ 101 lakhs ₹ 100 lakhs ₹ 50 lakhs (4) Amount received by way of RTGS/ NEFT in the P.Y. 2025-26 [included in (3) above] ₹ 150 lakhs ₹ 80 lakhs ₹ 70 lakhs ₹ 45 lakhs (5) Amount received by way of cash in the P.Y.2025- 26 [included in (3) above] ₹ 30 lakhs ₹ 21 lakhs ₹ 10 lakhs ₹ 5 lakhs (6) Amount received by way of RTGS/ NEFT between 01.04.2026 & 31.7.2026 ₹ 20 lakhs - ₹ 20 lakhs - (7) Working partners’ salary ₹ 5 lakhs ₹ 1.50 lakhs ₹ 3 lakhs ₹ 5 lakhs (8) Interest on capital@12% to partners ₹ 1 lakh ₹ 0.50 lakh - ₹ 2 lakhs (9) Profit as per books of account maintained as per section 44AA [after deducting working partners’ salary and interest on capital] ₹ 5.60 lakhs ₹ 4.10 lakhs ₹ 4.50 lakhs ₹ 20 lakhs (10) No. of vehicles owned - 10 (See Note 2 below for details) - - Additional information: (1) It may be assumed that partners’ salary and interest are authorized by the partnership deed, relates to a period after the partnership deed and is within the permissible limits laid down under section 40(b). (2) The details of vehicles owned by M/s. LM & Co. are as follows – Gross Vehicle Weight (in kgs) Number Date of purchase Date when first put to use (1) 8,000 28.5.2025 1.6.2025 (2) 9,000 31.7.2025 1.8.2025 (3) 10,000 17.8.2025 20.8.2025 (4) 11,000 30.9.2025 1.10.2025 (5) 12,000 11.11.2025 13.11.2025 (6) 13,000 31.12.2025 1.1.2026 From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 4
Basic Concepts
The following are the particulars relating to four Indian companies, namely, A Ltd., B Ltd., C Ltd. and D Ltd. – Particulars A Ltd. B Ltd. Date of setting up/registration 1.9.2020 1.11.2025 Main object Manufacture of steel Manufacture of apparel Place Madhya Pradesh Warangal in Telangana Value of new plant and machinery installed and put to use on the date of setting up of the company ₹ 10 crore ₹ 4 crore Gross Total Income of P.Y.2025-26 ₹ 4.90 crore ₹ 2.80 crore No. of new employees employed on the date of setting up of the company Monthly emoluments to employees by account payee cheque: 500 employees ₹ 24,000 per employee ₹ 24,000 per employee 500 employees ₹ 25,100 per employee ₹ 26,000 per employee Particulars C Ltd. D Ltd. Date of setting up/ registration 1.4.2000 1.1.2005 Main object Trading in leather goods Trading in food grains Place Tamil Nadu Karnataka Turnover P.Y.2021-22 ₹ 347 crore ₹ 201 crore P.Y.2022-23 ₹ 395 crore ₹ 225 crore P.Y.2023-24 ₹ 499 crore ₹ 251 crore P.Y.2024-25 ₹ 350 crore ₹ 342 crore P.Y.2025-26 ₹ 424 crore ₹ 380 crore Details of income returned & assessed for A.Y.2026-27 As per return of income filed ₹ 14 crores ₹ 17 crores Income determined u/s 143(1)(a) ₹ 16 crores ₹ 20 crores Income assessed u/s 143(3) ₹ 20 crores ₹ 22 crores From the information given above, choose the most appropriate answer to the following questions:
0/5 solved
Case Scenario 6
Basic Concepts
furnished by the firm for A.Y.2026-27: Particulars of total income ₹ (1) As per the return of income furnished u/s 139(1) 40,00,000 (2) Determined under section 143(1)(a) 50,00,000 (3) Assessed under section 143(3) 65,00,000 (4) Reassessed under section 147 85,00,000 Mr. N, a resident individual (aged 58 years) and a partner of the above firm, has not furnished his return of income for A.Y.2026-27. However, his total income assessed in respect of such year under section 144 is ₹ 15 lakh. From the information given above, choose the most appropriate answer to the following questions:
0/5 solved
Case Scenario 7
Basic Concepts
Mr. Manoj (aged 45 years) is a resident Indian who has the following life insurance policies, some of which are ULIPs. The details of such policies are given hereunder: Particulars A B C (ULIP) D (ULIP) E (ULIP) F (ULIP) Date of issue 1.4.2016 1.4.2017 1.2.2021 1.1.2021 1.3.2021 1.4.2021 Annual premium ₹ 50,000 ₹ 40,000 ₹ 1,00,000 ₹ 3,00,000 ₹ 1,40,000 ₹ 2,50,000 Date when premium falls due every year 1st April 1st April 1st Feb 1st Jan 1st March 1st April Date of maturity 31.3.2026 31.3.2026 31.1.2030 31.12.2030 28.2.2030 31.3.2030 Consideration received on maturity (including bonus) ₹ 7,00,000 ₹ 4,00,000 ₹ 11,00,000 ₹ 32,00,000 ₹ 17,00,000 ₹ 28,00,000 Sum assured ₹ 6,00,000 ₹ 3,50,000 ₹ 10,00,000 ₹ 30,00,000 ₹ 15,00,000 ₹ 25,00,000 under section 115BAC. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 8
Basic Concepts
Mr. Sunil, Mr. Sriram and Mr. Shyam are three brothers, who are resident Indians engaged in independent retail trade business of food grains in Pune, Thane and Nagpur, respectively. Their turnover for F.Y.2024-25 were ₹ 9 crores, ₹ 10 crores and ₹ 12 crores, respectively. They regularly purchase food grains from another resident, Mr. Ashwath, a wholesaler in Mumbai. The turnover of Mr. Ashwath for F.Y.2024-25 was ₹ 18 crores. They all follow mercantile system of accounting. The aggregate amount credited by the brothers to the account of Mr. Ashwath during each month of the F.Y.2025-26 is shown in the table below. It may be assumed that the entire amount relating to Mr. Ashwath for a particular month is credited to his account on the last date of that month and is paid entirely on the last date of the immediately following month. Likewise, Mr. Ashwath also debits the accounts of Mr. Sunil, Mr. Sriram and Mr. Shyam on the last date of the month with the amount of sales effected during each month. Month Value of purchases from Mr. Ashwath Mr. Sunil Mr. Sriram Mr. Shyam ₹ ₹ ₹ April, 2025 5.90 lakhs 7.50 lakhs 9.80 lakhs May, 2025 7.10 lakhs 6.85 lakhs 8.75 lakhs June, 2025 8.20 lakhs 8.20 lakhs 9.45 lakhs July, 2025 6.80 lakhs 6.45 lakhs 6.80 lakhs August, 2025 4.90 lakhs 5.95 lakhs 6.30 lakhs September, 2025 5.80 lakhs 7.10 lakhs 8.15 lakhs October, 2025 7.20 lakhs 8.60 lakhs 7.80 lakhs November, 2025 6.70 lakhs 6.80 lakhs 9.10 lakhs December, 2025 8.10 lakhs 7.85 lakhs 7.90 lakhs January, 2026 9.00 lakhs 8.90 lakhs 8.25 lakhs February, 2026 7.90 lakhs 6.70 lakhs 7.95 lakhs March, 2026 8.40 lakhs 9.10 lakhs 7.75 lakhs Total 86 lakhs 90 lakhs 98 lakhs Mr. Sunil’s friend Mr. Krishna, who commenced retail trade business in April, 2025, entered into a one-time transaction with Mr. Ashwath for purchase of food grains for ₹ 60 lakhs on 30th June, 2025, on which date he credited the said sum to the account of Mr. Ashwath. He, however, paid the said sum to him only on 2nd July, 2025. From the information given above, choose the most appropriate answer to the following questions:
0/1 solved
Case Scenario 10
Basic Concepts
On 1.4.2025, UI Ltd., an Indian company, borrowed ₹ 50 crores @ 9.5% p.a. from M Inc., a US entity, thereby increasing its total borrowings to ₹ 65 crores. The said loan is guaranteed by H Inc., another US entity. The place of effective management of both M Inc. and H Inc. is in the USA. The total assets of UI Ltd. is ₹ 180 crores. UI Ltd. imported turbo equipment worth ₹ 30 crores from H Inc. Import duty of ₹ 4.50 crores on the same was paid by UI Ltd. The equipment was sold to T Ltd. for ₹ 40 crores. Normal GP margin of UI Ltd. in similar uncontrolled transaction is 20% on sale. Net profit of UI Ltd. of A.Y.2026-27 was ₹ 8 crores after debiting interest of ₹ 6 crores (out of which ₹ 1.25 crores interest pertaining to local borrowings), From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 11
Basic Concepts
A co-operative bank provides the following information relating to cash withdrawals by its two customers during the P.Y.2025-26: Date of cash withdrawal Mr. A (Savings Account) (₹) Mr. B (Current Account) (₹) 05.04.2025 20,00,000 - 10.05.2025 - 18,00,000 25.06.2025 25,00,000 - 17.07.2025 - 5,00,000 28.10.2025 35,00,000 - 10.11.2025 - 38,00,000 12.12.2025 25,00,000 - 02.01.2026 - 37,00,000 Mr. B has not filed his return of income for the last three years whereas Mr. A has been regularly filing his return of income. No other customer of the co- operative bank had withdrawn more than ₹ 10 lakhs during the P.Y. 2025-26. One of the customers of the co-operative bank, Mr. K paid ₹ 12 lakhs out of bills for ₹ 15 lakhs raised in respect of the credit card account by account payee cheque and was declared bankrupt thereafter. The actual bad debts of the bank (including bad debts on account of Mr. K) during the P.Y. 2025-26 were ₹ 20 lakhs. The aggregate average advances made by its rural branches were ₹ 120 lakhs. The gross total income of the bank, before any deduction under section 36(1)(vii)/36(1)(viia) for A.Y. 2026-27 is ₹ 100 lakhs. A notice was issued to the co-operative bank on 30.09.2026 by the prescribed transaction by 30.10.2026 as the co-operative bank had failed to do so. The co-operative bank, however, furnished the statement only on 25.11.2026. From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 12
Basic Concepts
X Pvt. Ltd. (“X”) is an Indian company. Y Inc (“Y”) is a private company are promoted by Mr. Ayush who holds 30% equity share capital and voting power in both X and Y. The balance sheet of X as on 31st March, 2026 is as follows: Liabilities Amount (₹ million) Assets Amount (₹ million) Paid up capital Fixed Assets Loans: Investments From Y Cash and bank balance From others Current liabilities Total 1,200 Total 1,200 Additional information: (i) carries 6.5% p.a. rate of interest. For borrowers with similar risk profile who are not associated enterprises of Y, Y advances loan at 4% p.a. interest rate. (ii) X has maintained such information and document in respect of the international transaction as has been prescribed under section 92D but has not reported the transaction as an international transaction. X does not make any adjustment to its total income on account of application income. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 13
Basic Concepts
LPG, a partnership firm, is engaged in the business of manufacturing of garments. It furnishes you the following data for the year ended 31.3.2026. Profit & Loss Account Particulars ₹ Particulars ₹ Expenses 2,36,00,000 Gross Turnover 2,55,00,000 Interest to partners (including ₹ 1,20,000 paid to Gopal for loan given by Gopal HUF) 5,40,000 Salary to Partners: Jay (₹ 30,000 p.m.) Gopal (₹ 28,000 p.m.) Madhav (₹ 16,000 p.m.) 8,88,000 Net Profit 4,72,000 2,55,00,000 2,55,00,000 Other Information: - The partners share profits and losses equally. - During the P.Y. 2024-25, the firm had incurred a business loss of ₹ 3,00,000 and unabsorbed depreciation of ₹ 1,50,000. - On 01.04.2025, Mr. Jayesh, a partner died and his legal heir Mr. Jay got admitted on same date. Another partner, Mr. Raj, also retired on the same date. - Mr. Madhav is not actively engaged in conducting the affairs of the business of the firm while Mr. Jay and Mr. Gopal are actively engaged in conducting the affairs of the business. - Interest@16% p.a. for the first time on partner’s capital was paid from 01.07.2025. The clause for the same was, however, entered in the partnership deed on 01.01.2026. Salary paid to partners is authorized by the partnership deed since inception. From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 14
Basic Concepts
X Ltd. (“X”) is an Indian company incorporated on 1st October, 2023 with the objective of manufacturing medicines using state-of-the-art technology previously unused in India. It commences production from 1st December, from its newly- constructed manufacturing facility in Uttar Pradesh; its registered office is also situated at the said manufacturing facility. Y Inc (“Y”) is a private company incorporated in a foreign jurisdiction. X holds 30% share in the nominal value of the equity share capital of Y. Y lent an amount of ₹ 50 crores@6% p.a. to X on 1st April 2025 and X paid the interest due for the F.Y. 2025-26 on 31st March, 2026. The transaction is at arm’s length price and X has not availed any other loan. F.Y. 2025-26 is ₹ 6,00,00,000, which includes dividend of ₹ 7,50,000 received by X from Y on 1st July, 2025. Additional information: (i) X has registered a patent in India for treatment of a novel virus which it has developed in collaboration with Y. 90% of the total expenditure for developing the patent has been incurred by X in at its manufacturing facility in Uttar Pradesh while the remaining has been incurred by Y outside India. (ii) X receives royalty of ₹ 5 crore by permitting other companies to use its patent. The total expenditure incurred for earning such royalty is ₹ 42,00,000. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 15
Basic Concepts
DEF Inc., a company incorporated under the laws of Country A, is engaged in management consultancy services. It has set up a branch office in India. India has a DTAA with Country A. During the F.Y. 2025-26, it earns the following income in India - (i) Fee for technical services of ₹ 75,00,000 from ABC Ltd., an Indian company, in pursuance of an agreement made with it and approved by services is not effectively connected with the branch office in India. (ii) DEF Inc. incurred expenses of ₹ 3,00,000 in earning such income from fee for technical services. (iii) Sale of shares of Bottle Pvt. Ltd., an Indian company, for ₹ 2,60,00,000 on 15th April 2025. (iv) Other income ₹ 10,00,000 All the above income has been credited to the statement of profit and loss of the company. DEF Inc. had made an investment in 100% equity share capital of Bottle Pvt. Ltd., purchased for ₹ 1,75,00,000 on 5th November, 2004. The said shares were purchased out of foreign exchange of USD 3,50,000 brought from outside India. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 16
Basic Concepts
Wellness Pvt Ltd, an Indian company incorporated on 1st April, 2025 offers multi-disciplinary marketing services in print and digital media to Indian businesses. To carry on its business, the company has engaged local advertising specialists in the field of print and digital media. These specialists attend clients of the company by doing required consultancy, execution and also perform analysis of results. Depending upon the service request of the client – whether print or digital mode, specialists perform relevant tasks. The specialists employ their individual skills and exercise discretion, judgement while performing the duties. The policies of the company regarding working hours, annual leave applicable to the staff do not apply to these specialists. The remuneration of specialists varies every month depending upon type of service, seniority of specialist, skills involved etc. During the year 2025-26, Wellness Pvt Ltd recorded a turnover of ₹ 1.10 crores in its books of accounts. Inspired by the Government’s Digital India initiative, the company provided electronic payment facilities to customers. Most of the billed amount was collected through digital means, except from Customer X (Bill no. 15, dated 26th June, 2025 of ₹ 5,50,000 for printing invitation card for a marriage ceremony). Customer X paid the amount in cash to the company in 4 installments on different dates - ₹ 1,50,000, ₹ 75,000, ₹ 1,75,000 and ₹ 1,50,000. The details of payments made by the company during the year 2025-26 are as under: Particulars Mode of payment Amount (₹) Professional Fees to 20 specialists Net-banking 35,00,000 Salary to staff (3 employees) (HR, junior coordinator) (Each person has total income more than ₹ 8 lakh) Net-banking 25,00,000 Wages to security guard, housekeeping staff (wages of ₹ 15,000 p.m. each) Cash 5,40,000 Computers purchased on 15th May, 2025 and put to use from 15th October, A/c payee Cheque 3,50,000 Interest for P.Y. 2025-26 on loan availed on 15th April, from SBI for purchase of computers A/c payee Cheque 34,500 Other administration expenses (Each expense is of less than ₹ 8,000) Cash 70,000 Advance given to suppliers, specialists etc. Cash 90,000 The company could recruit a qualified finance and accounts professional only compliances were undertaken and the default with respect to non-deduction March, 2026 was corrected in the month of April, 2026. The company withheld Government in the same month. Being the first year of operation, all transactions of the company are with Indian resident parties. The company has chosen to follow mercantile system From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 17
Basic Concepts
Mallika purchased a land in Pune at a cost of ₹ 50 lakhs in December 2008 and held the same as her capital asset till 30th September, 2022. She started her real estate business on 1st October, 2022 and converted the said land into stock-in-trade of her business on the said date, when the fair market value of the land was ₹ 300 lakhs. She constructed 20 apartments of equal size, quality and dimension and the construction was completed in December, 2025. Cost of construction of each apartment is ₹ 15 lakhs. She sold 14 apartments at ₹ 40 lakhs per apartment during the period from January, 2026 - February, 2026. The remaining 6 apartments were held in stock as on 31st March, 2026. All the six apartments were sold in April, 2026 at ₹ 40 lakhs per apartment. She also holds a penthouse in Nagpur, construction of which was completed in March, 2025, as stock-in-trade. She let out the penthouse to Mr. Harish, a salaried individual, for ₹ 60,000 per month from April, 2025 to March, 2026, to whom she has 2025-26 and 2026-27 in March, 2026 and March, 2027, respectively. The said penthouse was, thereafter, sold in April, 2027 for ₹ 70 lakhs. She invested ₹ 20 lakhs in bonds issued by National Highway Authority of India on 31st March, 2026; ₹ 20 lakhs in bonds of Rural Electrification Corporation Ltd. on 30th June, 2026, ₹ 10 lakhs in bonds of Rural Electrification Corporation Ltd. on 30th September, 2026 and ₹ 10 lakhs in bonds of National Highway Authority of Cost Inflation Indices: F.Y.2008-09: 137 F.Y.2022-23: 331 F.Y.2023-24: 348 F.Y.2024-25: 363 F.Y.2025-26: 376 From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 18
Basic Concepts
PQR LLP commenced operations of the business of a new three-star hotel in Baroda, Gujarat on 1.4.2025. The company incurred capital expenditure of ₹ 75 lakh on land in March, 2025 exclusively for the above business, and capitalized the same in its books of account as on 1st April, 2025. Further, during the P.Y. 2025-26, it incurred capital expenditure of ₹ 3 crore (out of which ₹ 1.25 crore was for acquisition of land and ₹ 1.75 crore was for acquisition of building) exclusively for the above business. The payments in respect of the above expenditure were made by account payee cheque. The profits from the business of running this hotel (before claiming deduction under section 35AD) for the A.Y.2026-27 is ₹ 80 lakh. Mr. P, one of the partners of the LLP, has commenced the business of manufacture of apparel on 1.10.2025. He employed 220 new employees during the P.Y. 2025-26, the details of whom are as follows – No. of employees Date of employment Regular/ Casual Total monthly emoluments per employee (₹) (i) 1.10.2025 Regular 24,000 (ii) 1.10.2025 Regular 24,500 (iii) 1.11.2025 Casual 25,500 (iv) 1.11.2025 Regular 25,000 (v) 1.12.2025 Casual 24,000 All regular employees participate in Recognized Provident Fund and their emoluments are paid by account payee cheque. The profits and gains derived from manufacture of apparel that year is ₹ 92 lakhs and his total turnover is ₹ 10.20 crores. From the information given above, choose the most appropriate answer to the following questions:
0/2 solved
Case Scenario 20
Basic Concepts
Ganga LLP is a limited liability partnership set up a unit in Special Economic Zone (SEZ) in the financial year 2019-20 for manufacture of textiles. The unit During the financial year 2024-25, it has also set up a warehousing facility in Pune for storage of sugar, fulfilling the conditions for claim of deduction under section 35AD. Capital expenditure in respect of warehouse amounted to ₹ 97 lakhs (including cost of land ₹ 32 lakhs). The warehouse became operational with effect from 1st April, 2025 and the expenditure of ₹ 97 lakhs was capitalized in the books on that date. The details for the financial year 2025-26 are given hereunder: Particulars ₹ Profit of unit located in SEZ 60,00,000 Export sales of above unit received in India in convertible foreign exchange on or before 30.9.2026 1,20,00,000 Domestic sales of above unit 40,00,000 Profit from operation of warehousing facility (before considering deduction under section 35AD) 1,60,00,000 Mr. Ganesh, one of the partners of the LLP, commenced the business of manufacture of leather on 1.4.2024. His turnover in the P.Y.2024-25 is ₹ 180 lakh and in the P.Y.2025-26 is ₹ 200 lakhs. The payments made in the P.Y.2025-26 is ₹ 190 lakhs. The profit for P.Y.2025-26 as per books of account maintained u/s 44AA is ₹ 12.10 lakhs. Out of the turnover of ₹ 200 lakhs, ₹ 190 lakhs is received through RTGS and NEFT and ₹ 10 lakhs is received by way of cash. Out of the payments of ₹ 190 lakhs made (including expenditure incurred), ₹ 180 lakhs is through RTGS/ NEFT and the remaining ₹ 10 lakhs through cash. From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 21
Basic Concepts
BMT Shipping Co. is an Indian company having its place of effective management in India. It owns three vessels out of which two are “Qualifying Ships”. The registered tonnage of the two qualifying vessels is 33,840 tons and 230 kgs and 24,952 tons and 370 kgs respectively. In the F.Y. 2025-26, the first vessel was operated for 212 days and the second for 347 days. was ₹ 1200 lakhs. Ships forming part of Block of Assets WDV as per books as on 01-04-2025 (₹ in lakhs) Qualifying Ship 1 Qualifying Ship 2 Non-qualifying Ship 3 Other Information: (i) Profit from core activity referred to in section 115-VI(1) read with 115- VI(2) is ₹ 70 lakhs. (ii) Profit from incidental activity computed as per section 115-VI(1) read with 115-VI(5) is ₹ 14 lakhs. (iii) Book profits calculated as per the Explanation to section 115JB(2) [in so far as it relates to income derived from core and incidental activity] are ₹ 100 lakhs. LMN Shipping Co. is a foreign company whose place of effective management is outside India in the P.Y.2025-26. Its gross receipts for P.Y.2025-26 is ₹ 630 lakhs, the break up of which is given hereunder – Place where goods are shipped Place where amount is paid to/received by BMI Shipping Co. Amount paid (₹ in lakhs) (i) Goods shipped at ports in India In India Outside India (ii) Goods shipped at ports outside India In India Outside India From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 22
Basic Concepts
Mr. Sachdeva had bought a residential house worth ₹ 4 crores at Worli, Mumbai in 2000 and let out the house on rent to Mr. Akhil. The property was funded through loan from SBI. The interest due for F.Y.2025-26 to SBI is ₹ 40 lakhs, out of which he paid only ₹ 37 lakhs during the year. Mr. Sachdeva then took a loan of ₹ 2 crores from another bank, namely, MPC Bank on 1.10.2025 for construction of first floor in that house for self-occupation. The construction is in progress as on 31.3.2026. Mr. Sachdeva started repaying EMIs due to MPC Bank. During the P.Y. 2025-26, he repaid principal amount of ₹ 30 lakhs and ₹ 5 lakhs to SBI and MPC Bank, respectively. He also paid interest of ₹ 5 lakhs to MPC Bank out of ₹ 6 lakhs, being interest due for the period from 1.10.2025 to 31.3.2026. Mr. Sachdeva transfers a house property in a village at Wada in his minor daughter’s name i.e., Miss Rysha’s as her birthday gift. Miss Rysha gave the said house to the Panchayat head from April, 2025 at a rent of ₹ 5,000 per month. Mrs. Sachdeva’s total income for A.Y.2026-27 is higher than that of Mr. Sachdeva, since she won ₹ 20 lakhs from lottery this year. In other years, Mr. Sachdeva’s total income is higher than that of Mrs. Sachdeva. Miss Rysha has not had any other source of income in any earlier year. Also, she does not have any other source of income this year. Mr. Sachdeva bought petrol driven car worth ₹ 50 lakhs and an electric vehicle worth ₹ 70 lakhs on loan from BSM Bank which it sanctioned on 1.4.2022. BSM Bank charged interest of ₹ 5 lakhs on petrol driven car and ₹ 7 lakhs on electric vehicle for the P.Y.2025-26. Mr. Sachdeva has also taken loan from FRM Bank for his daughter’s higher education. He paid ₹ 50,000 as interest to FRM Bank. He also paid medi-claim of ₹ 20,000 to New India Assurance Scheme for insuring his health. Mrs. Sachdeva owns a shop of 100 square feet area in Mumbai. She rented it to an architect who gave her an interest-free deposit of ₹ 1,00,000. The rent paid by the architect from 1st April, is ₹ 60,000 per month. Mr. Sachdeva’s brother, Mr. Ajay who is a non-resident sold his house at Bandra Kurla Complex, Mumbai to another non-resident, Mr. David, who is based at Germany for a consideration of ₹ 20 crores on 01.09.2025. Mr. Ajay died on 01.11.2025 on account of a car accident. From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 23
Basic Concepts
Mr. Rajat is a diamond merchant. During the P.Y.2025-26, he has turnover of ₹ 20 crores and net profit of ₹ 60 lakhs after taking into account all the permissible deductions. He has invested in shares of various private limited companies, from which dividend of ₹ 12 lakhs is receivable by him. He has two house properties in India, both of which were self-occupied. On one of the properties, he had taken loan of ₹ 50 lakh on which interest payable was ₹ 2,50,000, out of which he paid ₹ 1,80,000 during the year. On his birthday, he received jewellery from his friend (fair market value of which was ₹ 5 lakhs). He had also withdrawn cash of ₹ 1.2 crores during the P.Y. 2025-26 in aggregate from his current account maintained with ABC Bank. Further, he also withdrew ₹ 50 lakhs from a co-operative bank account in October, 2025. He is regularly filing his return of income. His brother, Mr. Rahul has not filed his return of income for the last five years, even though his total income exceeded the basic exemption limit. He withdrew ₹ 50 lakhs from a co-operative bank account in March, 2026. Also, Mr. Rajat holds 20% voting power in XYZ Pvt. Ltd. (closely held company and engaged in diamond manufacturing) from which he has obtained loan of ₹ 10 lakhs on 1.4.2025. The company had free reserves of ₹ 8 lakh as on 31.3.2025. From the information given above, choose the most appropriate answer to the following questions:
0/2 solved
Case Scenario 24
Basic Concepts
The Assessing Officer surveyed TR & Hotels, which was within his jurisdiction, at 11:30 p.m. on 15.8.2025 for the purpose of obtaining information which restaurant is kept open for business every day between 11 a.m. and 12 midnight. On 25.8.2025, the Assessing Officer entered RR & Hotels which was also within his jurisdiction at 9:15 p.m. for the purpose of collecting information which is kept open for business every day between 7 am to 10:30 pm. In both the above cases, the Assessing Officer impounded and retained in his custody for a period of 18 days (exclusive of holidays), books of account and other documents inspected by him, after recording reasons for doing so. The authority equivalent to Commissioner or above for doing so. The owners of these restaurants claim that the Assessing Officer could not enter the restaurants after sunset and take away with him the books of account kept at the restaurants. The owners also claimed that the Assessing equivalent to Chief Commissioner or above before entering the restaurants. From the information given above, choose the most appropriate answer to the following questions:
0/1 solved
Case Scenario 25
Basic Concepts
M/s. LMN LLP filed its return of income for A.Y.2025-26, declaring total income of ₹ 18 lakhs, on 2nd December 2025. On processing of return, the total income determined under section 143(1)(a) was ₹ 22 lakhs, after disallowing claim for deduction under section 10AA on account of late furnishing of return of income. Thereafter, on scrutiny, the Assessing Officer made some additions under section 40(a)(ia) and section 43B and passed an assessment order under section 143(3) assessing total income of ₹ 35 lakhs. Later on, the Assessing Officer noticed that some information is flagged for assessment. Based on the said information, notice under section 148 was issued for making reassessment under section 147 after compliance with the requirements stipulated under section 148A. The total income reassessed under section 147 was ₹ 42 lakhs. Consider that none of the additions or disallowances made in the assessment or re-assessment as above qualifies under section 270A(6). From the information given above, choose the most appropriate answer to the following questions:
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Case Scenario 26
Basic Concepts
Seva Niketan, a charitable trust registered under section 12AB runs an educational institution, which is engaged solely in education and a hospital for treatment of persons suffering from mental disorder solely for philanthropic purposes. The trust furnished the following information: (i) The total receipts of the trust for the P.Y. 2025-26 for educational institution is ₹ 3.10 crores and for the hospital it is ₹ 3.40 crores. (ii) Voluntary contributions [included in (i) above] received for the P.Y. 2025-26 from the public amounted to ₹ 105 lakhs. It includes corpus donations of ₹ 55 lakhs (for purchase of building for the trust) and anonymous donations of ₹ 20 lakhs. (iii) During the P.Y. 2025-26, computers purchased for ₹ 50 lakhs out of - Loan – ₹ 25 lakhs - Voluntary contributions - ₹ 25 lakhs (iv) Corpus donations received during the current year are invested in - - Post Office Savings Accounts ₹ 10 lakhs - Canara Bank as Fixed deposits ₹ 5 lakhs - Non-banking Financial Corporation (NBFC) ₹ 10 lakhs (v) Deposited ₹ 15 lakhs towards post office savings account which were utilised for purchase of building during the P.Y. 2020-21 and P.Y. 2021- 22 out of corpus fund ₹ 10 lakhs and ₹ 5 lakhs, respectively. (vi) Amount paid to another trust registered u/s 12AB by way of donation of ₹ 10 lakhs. Out of the said amount of ₹ 2 lakhs are given as corpus donations. (vii) ₹ 6 lakhs, being the amount set apart in the P.Y.2024-25 by the trust for charitable purposes u/s 11(2) utilized in the P.Y. 2025-26 for making donation to another charitable trust, whose object is also education. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 27
Basic Concepts
The following details pertain to Mr. Sahil and his best friend Mr. Akhil: Mr. Sahil Particulars Amount (₹) Amount remitted to his elder son Aarav, who is pursuing two-year MBA Program from Columbia University, USA - Out of own savings through HDFC Bank, an authorized dealer under Liberalized Remittance Scheme (LRS) of the RBI • towards tuition fees on 5.7.2025 3,50,000 • to meet day to day expenses for study purposes - 10.5.2025 - 29.9.2025 - 01.1.2026 1,20,000 90,000 1,35,000 - Through Axis Bank, an authorized dealer under Liberalized Remittance Scheme (LRS) out of • loan (towards tuition fees) on - 11.10.2025 - 10.01.2026 • Own savings (to meet day to day expenses) on 1.7.2025 3,50,000 3,50,000 4,50,000 To complete the formalities of admission, Mr. Sahil visited the USA from 10.4.2025 to 13.4.2025 for which he purchased a tour package from M/s Gate 2 Travel, a foreign tour operator and remits money under LRS on 5.4.2025. International travel tickets and hotel accommodation are included in the said package. 5,20,000 Mr. Sahil has furnished undertakings containing the details of earlier remittances to HDFC bank and Axis bank. He has also furnished his PAN to the authorized dealers and to the seller of overseas tour program package. Mr. Akhil Mr. Akhil, an Indian citizen got a job offer from M/s Wellbeing Inc., a Dubai- based company of AED 10,500 per month. He left for Dubai on 29.3.2025 and joined M/s Wellbeing Inc. on 1st April 2025. He returned to India on 15.12.2025 on leaves for 15 days. On 23.12.2025, he went on 7 days tour to Bali with his wife and son. Thereafter, he directly went to Dubai with his wife and son. On 16.12.2025, he purchased a tour package for Bali from Make Your Trip, an Indian tour operator for which he paid ₹ 7,50,000 towards flight tickets and hotel accommodation. During F.Y. 2025-26, he has business income of ₹ 4,20,000 from a retail shop in India and interest on fixed deposit and savings account with Canara Bank of ₹ 1,20,000 and ₹ 8,000, respectively. From the information given above, choose the most appropriate answer to the following questions:
0/2 solved
Case Scenario 28
Basic Concepts
Sharma Pvt. Ltd. (“S”) files its return of income for the P.Y. 2025-26 on 30th applicable to the company is 25%. reported a disallowance of ₹ 2,80,000 towards personal expenditure of directors as no evidence was produced by S in support of this expenditure. However, S did not disallow the same in its computation and return of income. The return of income was processed by the Centralised Processing Centre making an addition of ₹ 2,80,000 towards personal expenditure and the loss u/s 143(1) was computed at ₹ 15,20,000. The return of income was selected for scrutiny assessment and by order passed u/s 143(3), the loss as per normal provisions was reduced to ₹ 11,60,000 by making an addition of ₹ 3,60,000. The assessment was reopened u/s 147 and by order passed u/s 147, the loss as per preceding order u/s 143(3) was converted into income of ₹ 3,20,000. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 29
Basic Concepts
Omega Inc., a Country F company, maintains an online web-platform through which it provides end user computer software through an End-user Licence Agreement (EULA). Trailor Ltd., an Indian company, has entered into a contract for ₹ 6.7 crores with Omega Inc., for the Financial Year 2025-26, which is approved by the Central Government. The broad terms of the EULA between the two companies are as follows- Grant of licence. Omega Inc. grants Trailor Ltd. a limited non-exclusive licence to install, use, access, display and run the click wrap web-based Computer Software (CWCS) on a single local hard disk(s) or other permanent storage media of one computer. Trailor Ltd. should not make CWCS available over a network where it could be used by multiple computers at the same time. Reservation of rights and ownership. Omega Inc. reserves all rights not expressly granted to Trailor Ltd. in this EULA. The CWCS is protected by copyright and other intellectual property laws and treaties. Omega Inc. owns the title, copyright and other intellectual property rights in the CWCS. The CWCS is licenced (only for use and not any other purpose), not sold. Omega Inc. does not have any offices outside Country F. Extract of Article 12 of India-Country F DTAA Royalties and Fees for Technical Services 1. Royalties and fees for technical services arising in a Contracting State that other State. 2. in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the exceed 10 per cent. 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use : (a) any copyright of a literary, artistic or scientific work, including cinematograph film or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right, property or information From the information given above, choose the most appropriate answer to the following questions -
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Case Scenario 30
Basic Concepts
The following information pertains to Mr. Apoorv, an Indian citizen and non- resident in India, for the previous year 2025-26: (i) Dividend from TPO Ltd., an Indian Company (gross) of ₹ 1,30,000. (ii) Interest on debentures of SLP Pvt. Ltd. (subscribed in convertible foreign exchange) of ₹ 1,35,000 (gross). (iii) He incurred interest on loan taken for purchase of shares of TPO Ltd. and for purchase of debentures of SLP Pvt. Ltd. of ₹ 30,000 and ₹ 20,000, respectively. (iv) On 15th March 2026, he sold debentures of Fix Ltd. for ₹ 18,25,000 which were subscribed in convertible foreign exchange on 10th June 2004 in dollars equivalent to ₹ 4,65,000. He paid commission to broker of ₹ 7,000 at the time of sale. (v) On 30th April, 2026, he reinvested the sale proceeds of debentures of ₹ 4,80,000 for purchase of listed shares of an Indian company, Fly High Ltd. Cost Inflation Index: F.Y. 2004-05 - 113; F.Y.2025-26 – 376. From the information given above, choose the most appropriate answer to the following questions:
0/4 solved
Case Scenario 31
Basic Concepts
Falcon Ltd of Country X is an associated enterprise of Max Inc. of USA. Falcon Ltd. has a branch in India since 2010. It was selling goods to Indian customers by importing from various countries besides sale in India of goods manufactured by it in Country X. The adjusted total income of the Indian branch of Falcon Ltd for the year ended 31st March, 2026 is ₹ 80 lakhs. The branch incurred ₹ 12 lakhs by way of executive and general administrative expenditure during the financial year 2025-26. The head office has allocated ₹ 18 lakhs as the branch's share of head office expenditure including the expenditure of ₹ 12 lakhs incurred by the branch. A survey under section 133A of the Act was conducted in its branch premises in January, 2026 and undisclosed assets of ₹ 90 lakhs were found. Assessment for the assessment year 2025-26 was completed by making addition of the entire undisclosed asset of ₹ 90 lakhs. The assessee preferred appeal before Department wants to file an appeal before ITAT. T (P) Ltd. an Indian company, a wholly owned subsidiary of Falcon Ltd., paid ₹ 50 lakhs to XYZ Inc. of Country M as fee for technical services. Services were rendered by the employees of the branch of XYZ Inc. in India. There is no DTAA between India and Country M. T(P) Ltd. has entered into certain international transactions during the P.Y. 2024-25 and P.Y. 2025-26. T (P) Ltd. invested in SS (P) Ltd of Country Y and received dividend of ₹ 550 lakhs during the financial year 2025-26. It declared and distributed an interim dividend of ₹ 250 lakhs on 10.11.2025 and a final dividend of ₹ 230 lakhs on 12.11.2026. T (P) Ltd. has filed its return of income on 15.11.2025 for A.Y. 2025-26 and on 30.11.2026 for A.Y. 2026-27. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved
Case Scenario 32
Basic Concepts
A Ltd. is an Indian company which has invested in shares of other Indian and foreign companies. During the P.Y.2025-26, A Ltd. received dividend from these companies as follows: % of holding of A Ltd. Date of declaration of dividend by the company Date of distribution of dividend by the company Amount of dividend [Gross] (₹) Interest expenditure on loan borrowed for investment in shares (₹) B Ltd., an Indian company 10% 20.6.2025 3.7.2025 2,00,000 45,000 Inc, a foreign company 22% 17.9.2025 12.10.2025 4,00,000 90,000 Inc., a foreign company 30% 13.11.2025 28.11.2025 6,00,000 1,30,000 E Ltd., an Indian company 15% 14.1.2026 2.2.2026 3,20,000 70,000 A Ltd. declared and distributed dividend of ₹ 6 lakhs for the F.Y.2024-25 in June, 2025 and dividend of ₹ 7 lakhs for the F.Y.2025-26 in July, 2026 Mr. Aakash and Mr. Aarav are two brothers who have invested in shares of A Ltd. Both of them were born in India; their parents and grand parents were also born in India. Mr. Aakash is an Indian citizen who lives in Hyderabad. He is employed with a leading textile manufacturing unit at a salary of ₹ 1 lakh per month. His brother, Mr. Aarav is settled in Country Y since the year 2010. He is a citizen of Country Y and is a partner with a software development firm in Country Y. His share of profit in the Country Y firm for the F.Y. 2025-26 is CYD 1,20,000, which was credited to his bank account in Country Y. The value Y, since the share of profits of a firm is exempt in the hands of partners in Country Y. Mr. Aarav visits India for four months (in continuation) every year. He earns interest of ₹ 14 lakhs from fixed deposits with Bank of India. The details of investment in shares of A Ltd. by Mr. Aakash and Mr. Aarav are given below – Name of the shareholder % of holding Month of declaration & distribution of dividend Amt of dividend [Gross] (₹) Interest expenditure on loan borrowed for investment in shares (₹) Aakash 10% June, 2025 60,000 15,000 10% July, 2026 70,000 15,000 Aarav 15% June, 2025 90,000 20,000 15% July, 2026 1,05,000 20,000 On the basis of the facts given above, choose the most appropriate answer of [Ignore the provisions of DTAA, if any, with Country Y for the purpose of answering these questions] –
0/3 solved
Case Scenario 33
Basic Concepts
Mr. Subhash is a retailer of car spare parts. He started his business in May, 2022. His turnover for the P.Y. 2024-25 was ₹ 10.50 crores. He generally purchases goods from Car accessories & Co. only. Car accessories & Co. manufacturers and sells spare parts directly to the customers as well as through an e-commerce platform – CarParts.com. Car accessories & Co.’s turnover from the business for the P.Y. 2024-25 was ₹ 15 crores. The relevant information of purchases made by Mr. Subhash in P.Y. 2025-26 is given hereunder: Date of credit to account of Car accessories & Co. Date of Payment to Car accessories & Co. Value of spare parts without GST (₹) GST @18% Total value of spare parts/ payment 15.05.2025 02.06.2025 45,00,000 8,10,000 53,10,000 18.06.2025 30.06.2025 15,00,000 2,70,000 17,70,000 28.08.2025 17.08.2025 21,50,000 3,87,000 25,37,000 14.02.2026 28.02.2026 10,50,000 1,89,000 12,39,000 In addition to the above, Mr. Subhash also purchased spare parts of Car accessories & Co. for ₹ 12,00,000 inclusive of GST@18% through CarParts.com on 31.12.2025. The payment was made directly to Car accessories & Co. on 15.1.2026. PAN is duly furnished by Mr. Subhash, Car accessories & Co. and CarParts.com. The GST portion is indicated separately in the invoice of Car accessories & Co. but it is not shown separately when the goods are purchased through CarParts.com. From the information given above, choose the most appropriate answer to the following questions:
0/2 solved
Case Scenario 34
Basic Concepts
Trio Inc., a company incorporated in Country T, is engaged in manufacturing of computer hardware parts. Nice Ltd., an Indian Company, imports computer hardware parts from Trio Inc. During the previous year 2025-26, Nice Ltd. did not import any computer hardware parts from Trio Inc. Australian company. As on the date of loan, the book value of total assets in the books of Xylo Inc. was ₹ 4.52 crores. Out of the ten directors of Xylo Inc., five are appointed by Nice Ltd. Xylo Inc. repaid the entire loan along with interest thereon on 31st March, 2026. On 9.11.2025, Trio Inc. sold 3,500 equity shares held by it in an Indian Company, XYZ Ltd. for ₹ 102 per share. These shares were bought by Trio Inc. on 15th April 2011 for ₹ 36.40 per share. Both the purchase and sale of shares were effected through a recognized stock exchange in India and STT is paid on purchase and sale. Fair Market Value of these shares on 31-01-2018 was ₹ 90 per share. CII for F.Y. 2011-12 – 182; F.Y. 2025-26 – 376. Nice Ltd. received the draft order from the Assessing Officer as per section Transfer Pricing Officer in the arm’s length price for the A.Y. 2025-26. However, Nice Ltd. does not prefer to file the objection against the draft order before the Dispute Resolution Panel; Instead, it wants to file an appeal before the CIT (Appeals) under section 246A against the final order received from the Assessing Officer. From the information given above, choose the most appropriate answer to the following questions:
0/1 solved
Case Scenario 35
Basic Concepts
On 01.05.2025, ABC Ltd. (a listed co.) offered right shares in the ratio of 1:10 at a value of ₹ 50 per share. One of the shareholders, Mr. Sahil had 50,000 shares of ABC Ltd. on the date of offer of rights issue. He retains 30% of the rights and renounced balance right shares in favour of his friend, Mr. Jay for ₹ 15 per share on 28.05.2025. Mr. Sahil transferred 10,000 shares out of his original shares on 15.07.2025 for ₹ 65 per share. He had acquired these 10,000 shares at a cost of ₹ 2,38,000 on 21.6.2022. Further, Mr. Jay transferred the shares acquired from Mr. Sahil for ₹ 80 per share on 26.02.2026. XYZ Pvt. Ltd. bought back 80,000 shares on 14.12.2025 at a value of ₹ 200 per share. Such shares were issued for ₹ 20 per share (₹ 10, being the face value and ₹ 10, being premium) during the F.Y. 2012-13. Such bought back include 6,250 shares of Mr. Sahil (which he acquired on 28.5.2022 for ₹ 36.80 per share) and 250 shares of Mr. Rahul (which was inherited from his father). Rahul’s father acquired these shares on 24.5.2020 for ₹ 10 per share. Apart from this transaction, Mr. Rahul has income under head “Salaries” of Mr. Sahil does not have any other income for the P.Y. 2025-26. STT has been paid pertaining to the shares of ABC Ltd. From the information given above, choose the most appropriate answer to the following questions:
0/3 solved